The Fed is closely watching the jobs market
The euro-dollar pair had a wild week, with the Non-Farm Payrolls report showing more jobs than analysts expected and the ECB decreasing the deposit rate by 10 basis points to -0.3%.
The Fed is closely watching the jobs market (among other things of course) in order to time a rate hike which many anticipate to occur later this month.
That being said, one would expect the US Dollar to strengthen when the report showed more jobs than anticipated, but clearly it wasn’t the case or at least not to the extent traders believed it would. It remains to be seen if today we will see more of the NFP effects and if that happens, we will have a bearish day.
The first barrier in front of falling price is the support level at 1.0830, combined with the 50 period Exponential Moving Average. Together these types of support create a confluence zone which is tougher to break to the downside than a simple horizontal level. A true break will be confirmed by a re-test from below (price moves below 1.0830 then returns to touch it again and bounces lower).
How to trade
Once and if the re-test we talked about occurs, we favour end of day Puts as long as price remains below the 50 period Exponential Moving Average and below 1.0830.
However, lately the pair has been pretty stubborn and we might see a continuation of the bullish impulse started last week so as an alternate scenario, Calls can be used, but only after the bearish trend line seen on the chart above is broken.